Gmos in Philippine Agriculture: an Economic Analysis

However, others, such as some non-government organizations and consumers, oppose its use due to perceived health and environmental risks. The policy issue this paper seeks to answer is whether we should pursue the promotion of Smog in agriculture. However, we would confine ourselves to an economic analysis of the issue. So, what exactly is all this hullabaloo on Smog? Before answering this question, we should first level off on what “GM” means? Strictly defined, a Genetically Modified Organism (GM) is an organism produced from genetic engineering techniques that allow the transfer of functional genes from en organism to another. Organisms modified in 2 this way, are also referred to as being transgenic. An example of a GM is the so-called “Golden Rice” which contains three foreign Smog in Philippine Agriculture: an Economic Analysis By illustrate plant, Narcissus pseudoscience’s. 3 These genes complete the biochemical pathway that produces beta-carotene – a substance for combating vitamin A deficiency, which is responsible for 500,000 cases of irreversible blindness and one to two million deaths worldwide each year. Broadly defined, Smog include all organisms which have been genetically altered whether through genetic engineering or through conventional/traditional breeding. The focus of this paper, however, is

on the strictly defined GM, whose development and promotion remains controversial. In modern GM technology, genes can be moved both within or between species. It is the movement of genes between species which is of the greatest concern. GM technology thus gives the ability to add, subtract, alter or exchange an individual gene or a group of genes, which are known to influence an individual characteristic. Now that we know what Smog mean, let us try to answer the first question: What is al this hullabaloo about Smog? Pro-GM groups assert that Smog have many benefits (both existing and potential) and deserves to be promoted and developed. The benefits to farmers are higher crop yields, reduced farm costs (e. G. , no labor costs for spraying), increased farm profit, improvement in the environment (e. G. , less pesticide use), and varieties that can grow in poor conditions. 3 The benefits to consumers are the expected lower prices.

GM products are expected to have lower prices due to increased productivity (e. G. , higher yields) and lower production costs. Other examples of benefits are: more nutritious foods (e. G. Golden Rice), healthier oils (from soybean and Canola), potatoes with higher starch content, and edible vaccines in maize and potatoes. 3 3 Another benefit is that there would be no need to clear forests to produce agricultural land. Crops grown in existing areas will made more productive as well as those grown in poor soils or stressful environments. The anti-GM groups raises questions on health risks, environmental risks, ethical and moral questions, and economic risks. They raise the need for regulation and On health risks, they say that Smog are unnatural and GM food (or Frankfort, to extremist opposition) has possible negative health effects. 3 The specific food safety risks are: toxins and poisons, increased cancer risks, food allergies, contamination (e. G. , of product for human consumption by another similar product which is not fit for humans), and antibiotic resistance. On environmental risks, there is concern on the potential effect of the spread of Smog in nature, that biological diversity could be destroyed. On these grounds, even tests to gauge the safety of Smog are opposed. The specific environmental risks are: increased pesticide residues, genetic pollution, damage to beneficial insects, creation of supersedes, creation of supersets, creation of new viruses and bacteria, and genetic abominations (e. G. , superior Smog will destroy indigenous species). It is argued that long-term testing in complex environments will often be required before scientists can achieve even a basic understanding of the effects of releasing GM products on agriculture, crop varieties, soil fodder communities, plants, aquatic systems and biodiversity. 8 4 Even some scientists are wary of the technology. Dry. Joseph Cummins, professor emeritus of genetics at the University of Western Ontario says, ” modified viruses could cause famine by destroying crops and (sic) human and animal disease of tremendous power. ” Dry.

Michael Antonio, senior lecturer of molecular pathology in London adds, ” (Genetic engineering) results in disruption of the genetic blueprint of the organism with totally unpredictable consequences. ” “… Genetically-engineered foods… May produce an immediate effect or it could take years for full toxicity to come to light. ” 3 On ethical and moral grounds, anti-GM groups ask questions such as, “does man eave the right to play God? ” They also say that biotechnology reduces all life to bits of information (genetic code) that can be rearranged at whim by scientists. On the economic aspect, they claim that multinationals will use patented GM technology to control food supply and that the adoption of GM crops do not really significantly increase the income of farmers. Also, there is concern that the higher concentration of biotechnology research and development in developed countries will widen the income disparity between There is also the issue that our potential in carving a market niche for premium- ricer GM-free products, Philippine-produced, would be lost if we would produce Smog in our farms.

They also ask that appropriate regulation and labeling be implemented. GM products should not enter the market without proper regulatory 5 (along with needed legislation) measures already in place. Mandatory labeling of GM products is one of their major demands. Another issue raised is lack of public consultations on GM issues. Why is there seeming haste in the promotion and development of Smog in the Philippines? There is continuing heated debate on the GM issue. Given this environment, what is he stand of the government and non-government organizations?

The Government Stand The Government already has a policy statement on the use of modern biotechnology and its products. 9 In the policy statement, a paragraph states, “We shall ensure that all technologies will provide farmers and fisheries the opportunity to increase their over-all productivity and income; enhance the welfare of consumers; promote efficiency, competitiveness, and improved quality standards of local industries – all within the paramount objective of attaining safety and sustainable development, including its human, social and environmental aspects.

Another paragraph states, “. Concerned agencies are hereby directed to address the current issues associated with the local and global dimensions and trends of modern biotechnology, including its potential health, environmental and social impacts.

Towards this end, they shall conduct public consultations with representatives from civil society, government and business; formulate departmental directives and regulations on the access to and use of the products of modern biotechnology; coordinate activities and programs on research, development and application; and allocate appropriate resources for the 6 upgrading of capacities and capabilities to effectively regulate the technology and its products, including but not limited to product testing and labeling. This shows that the government recognizes the potential value of Smog and would promote its use subject to requirements still to be determined. However, it appears that the government has “hastened” the process by permitting the field trial of BIT areas are the test sites. They cite insufficient or lack of consultations with concerned Lugs and civil society.. It was only the National Biostatic Council of the Philippines (NBC) which approved the field testing. 0 The Non-government Organizations’ Position The abovementioned issues raised by anti-GM groups are the supported issues of some Nags in the Philippines.

These Nags have already embroiled against Smog. Even as early as 1997, a Philippine MONGO has already involved itself in such global protests such as the “Global Days of Action Against Gene-Foods or the Pure Food Campaign. 1 At present, they are involved in protests against the ongoing field trials on Bit corn in the Philippines. Framework This paper would confine itself to the assessment of the economic impact of Smog to Philippine agriculture. To begin, we should first determine where we are now in the GM market. From here, we could determine if we could handle GM technology safely (e. . , minimize risks). The second step is to determine whether we should go forward and promote Smog in Philippine agriculture or not. The question of going forward or not could be answered first by determining the benefits to farmers and consumers: “Would farmers and consumers really benefit in terms of profitability and lower prices and other benefits? ” Assuming that Smog are beneficial or are going to be beneficial, we should then asses the GM market by comparing it with the perfectly competitive market model (focusing on departures from overall efficiency). 0 From this comparison, we could then see if the Philippines should Join the GM-producing countries. If we find out that the GM market has many market imperfections, we would determine what we can do about these. From here, we could base our decision to Based on this assessment, we could also answer questions such as: “Would the Filipino farmer get the short end of the deal and become dependent on multinational companies for these Smog? Might we be losing a potential market niche for GM- ere agricultural products if we adopt Smog in the country? Assessment Where are we now? 8 This question has already been partly answered in the introduction of this paper. The government has already given its stand on biotechnology and has openly supported Smog through the NBC approval of field trials for Bit corn. On the other hand, Lugs and Nags are protesting. In addition, it is worth noting that the Philippines has already been penetrated by GM products. They are right in our supermarket shelves. (See annex A) Further, the Philippines is already a signatory to the 2000 Carrageen Biostatic

Protocol which, among other things, proposes to establish a Biostatic Clearinghouse for collecting, sharing, and disseminating information on risk assessment and management. 7 We already have a regulatory system in place and we are already into laboratory and field testing. 7 Several international and local research institutions in the Philippines have already started GM research. In other words, we are already much a part of the GM market in the international and domestic arena. Should we then go forward and promote Smog in Philippine agriculture?

With the assumption that we could handle GM technology (given the regulatory yester in place, the international agreements, and technical capability of concerned institutions), should the Philippines already Join the GM-producing countries? First, we should look at economic and other benefits. 9 Benefits to Farmers as compared to their conventional counterparts. (The analysis is based on the available studies, which mainly concerns Northern America and is limited to the most adopted GM crops – soybeans and corn. Canola has also been included. ) 1 Herbicide Tolerant soybeans allow for cost savings due to reduced use and cost of herbicides.

This could offset the higher seed price. However, the yield of GM beans is still lower than for conventional varieties. Comparing returns per hectare or per labor unit, no significant difference appears between the two types of crop. For Bit corn, significant yield gains have been observed. However, the cost effectiveness of Bit corn depends on growing conditions, in particular on the degree of infestation in corn borers. Applications of insecticide have decreased globally. Some studies show increased total costs for Biotechnology, first for seeds but also for weed control and fertilizer.

Results regarding profitability are contrasted. None can be considered as significant. There are no clear-cut results for comparing the profitability of Herbicide Tolerant Canola with non-GM crops. The unclear results are further magnified by the studies’ assumption of equal prices for the compared goods (GM and non-GM. ) If prices of Smog are lower, profit margins could be lesser. 10 The boxed article below seems to reinforce these mixed results. Are Smog profitable? (genetically modified organisms) 1 1 Issue: Deck, 1999 Smog (genetically modified organisms), especially Roundup Ready soybeans, are popular.

A study by Iowa State University economist Mike Duffy says they weren’t any more profitable Han non-Smog in 1998. Duffy recently analyzed a survey of 800 Iowa farmers by the National Agricultural Statistics Service and found return to land and labor nearly identical for Smog and non-Smog in 1998. GM beans, for example, had lower herbicide costs but lower yields. Net return was $144. 50/A for GM beans vs.. $145. 75 for non-GM varieties a statistical wash. Doyle Kara of Pioneer HI-Bred International says some Smog have higher yields than others and Pioneer wouldn’t introduce a GM variety unless it also competes in yields. The bottom line is there’s some value there,” he says, or farmers wouldn’t be buying GM seed. Duffy says the study wasn’t a yield comparison but an unusual systematic look at the real returns. Recent studies on Bit cotton (2001), however, showed significant economic benefits for farmers in China, Argentina, and South Africa. For example, for the 1999/2000 growing season in Argentina, there was an additional benefit of $65. 05/ha. This was due to higher yield, better quality, and savings from less insecticide applications used ($27. 55/ha). 3 so-called “convenience effect” which leads farmers to use GM crops.

With Smog, the inconvenience of weeding and/or spraying chemicals can be avoided. This results n savings on labor costs and time. 1 11 The abovementioned results show that economic benefits to farmers are uncertain. However, the Smog are continuously being developed and improved. The benefits, as shown by Bit cotton, cannot be ignored. Economic Benefits to Consumers The economic benefits to consumers are the expected lower prices. GM products are expected to have lower prices due to increased productivity (e. G. , higher yields) and lower production costs.

Examples of other benefits are: more nutritious foods (e. G. Golden Rice), healthier oils (from soybean and Canola), potatoes with higher torch content, and edible vaccines in maize and potatoes. Developing countries, where there is low income, high population growth rates, and malnutrition, would be the most to benefit with cheap and nutritious food that GM technology could possibly provide. GM Market vs.. Perfectly Competitive Market Given that benefits (existing and potential) from Smog are significant, should the Philippines Join the GM-producing countries.

This can be answered by studying the GM market by comparing it with the perfectly competitive market (focusing on departures from overall efficiency – imperfect competition, externalities, imperfect information, and public goods). A. Imperfect Competition In the GM market (specifically the crop sector), there is increased concentration on the input side (e. G. , seed market). Multinational biotech companies are acquiring seed companies or concluding business 12 agreements with them. They have also entered into new agreements with genomic companies to increase their research and technology portfolio.

Some biotech companies (there are seven main players to begin with) have also merged (Innovator, DuPont, Seneca, and Rhine-Opulence formed Avenues). 1 On the whole, biotech companies form an oligopoly for supplying inputs for crop Further consolidation is happening. On the downstream side, some have even entered agreements with food processors. Also, there are already several “gene to supermarket shelf” clusters such as Monsanto/Cargill/Continental – GM seeds production to grain exporting, and Innovator/DAM – development of specialty corn hybrids.

These developments raise the question of increased dependency of farmers on a limited number of suppliers for crop production. Farmers risk being “squeezed” between two (more or less) oligopolies industries (upstream and downstream). Hoffmann (1999) drew conclusions on the future role of farmers: ” the farmer comes a grower, providing the labor and often some capital but never owning the product as it moves through the food system and never making the major management decision. ” This is reinforced by the fact that GM seeds are often sold and sown under contract. Further, if market segregation (GM vs..

GM-free) and identity preservation (through labeling, patents, explicit mention of the origin and ingredients of the product) is done, GM or even non-GM crops, will increasingly be grown and sold using contracts. 1 13 Compared to a perfectly competitive market, the GM market only has a small number of firms. With their control of inputs, they could control prices. Not all firms are price-takers. Thus, there is imperfect competition. B. Externalities In the GM market, there are externalities, both positive and negative. One positive externalities is the lesser clearing of forests for agricultural land.

An example of a negative externalities is the potential development of insect resistance to Bit crops (which up to now there is no consensus among the scientific community, industry, and environmental Nags). These externalities carry social costs (as well as benefits) which cannot be ignored. C. Imperfect Information In the GM market, it seems that information is imperfect. For example, GM products enter our country without labeling. D. Public Goods In the GM market, the issue of treating GM technology as a public good is present. It is being argued that patenting should not be done.

As one research group says, controversies. It can be, and is argued, that to claim as a human invention a genetic sequence, or a product, which was part of creation, is inappropriate. No one can claim to have invented a living thing. The current debate covers views ranging from a total rejection of patenting in biotechnology through acceptance of man-made genes 4 the final products of transgress, e. G. New vaccines or oils made in plants, to the view of patenting as merely a means of regulating commerce. ” 2 Another public good present in the GM market is agricultural research.

Although the private sector (multinational corporations) is more active, government research institutions are also becoming more active in GM technology. Can we do something with these market imperfections? These abovementioned imperfections (or departures from overall market efficiency) can be dealt with. Some policy considerations or recommendations we could look into are: 1 . Imperfect competition as well as imperfect information, externalities and public good issues could be addressed in the global trade and multilateral organizations (e. . , WTFO, SEAN) and various agreements (e. G. GATE). 2. The government should also actively promote consultations with Lugs, Nags, farmers and consumers. To paraphrase what one scientist said in a recent research seminar, we should try to be sensitive to people’s views and culture. She cited, as an example, that now we are even considering the religious/cultural reaction of Muslims on SMOG. 12 3. Although government has a role in informing the public, industry could be encouraged to communicate the direct consumer benefits of GM technology.

At present, consumers perceive the risks of Smog to be far greater than the evidence suggests, and they do not perceive themselves to be recipients of any benefits of the technology. 15 4. On the public goods issue, one option in patenting is to establish temporary patents wherein after x number of years, the GM product would become a common good. With this, there is an incentive remains for inventors and the private sector to invest on GM development and promotion. Enough time should be allowed to enable them to recoup their investments and earn some profits. 13